Innovation Processes in Transition by Erkki Ormala Senior
Innovation Processes in Transition by Erkki Ormala Senior Fellow, Innovation Management Aalto University, Business School
Learning outcomes • A general understanding of innovation, innovation processes and innovation management, in different contexts, and their role in society and in business strategy. • Understand how innovation can (and cannot) be fostered, managed or steered, and which policies, processes and tools are needed, offering case-based insights in what works and what does not. • Understand how innovation is related to other functional business areas such as finance, marketing, buying, customer relations and to the over-all business design. • Understand specific issues and topics in fostering and managing innovation, e. g. technology platforms and innovation strategies, innovation in inter-organizational networks (ecosystems), service innovation, user driven innovation, collaboration in innovation, open innovation arrangements such as IP management, business model innovation, etc.
Course content 2019 01 November: Introduction to the course, review of innovation process and policy; innovation process in big companies, lecturer: Erkki Ormala 08 November: External speaker: Hannu Talvitie, Vaisala; Innovation policy systemic approaches, ‘How to save Finland’, lecturer: Erkki Ormala 15 November: External speaker: Pekka Koponen, Spinverse; Innovation in SMEs lecturer: Erkki Ormala 22 November: External speakers: Kai Husso Ministry of Economic Affairs and Employment; Leo Kärkkäinen Aalto University/Nokia 29 November: External speaker: Jussi Hinkkanen, Fuzu ; Platform economy, lecturer: Erkki Ormala 5 December: External speaker: Lotta Partanen, VTT; Industrial innovation in transition, Horizon project review; instructions for essay writing, lecturer: Erkki Ormala Additional external speakers: Taina Tukiainen, Aalto
Workload • 18 h participating in course sessions (mandatory) • 60 h reading the background material • 82 h writing a 8 page essay on a selected and approved topic (3000 words) by 15 December 2019
Creative destruction by Joseph Schumpeter • The creative destruction philosophy treats economics as an organic and dynamic process. This stands in stark contrast with the static and highly mathematical models of Cambridge-tradition economics. For example, the treatment by Schumpeter does not consider equilibrium to be the end goal of market processes; instead, many fluctuating equilibria are constantly reshaped or even replaced by dynamic innovation and competition. Read more: Creative Destruction http: //www. investopedia. com/terms/c/creativedestruction. asp#ixzz 4 wyr. Fom. U 7
Share of world GDP, 2004 and 2014
Innovation drives economic growth • Technology plays a major role in shaping industrial performance; it affects productivity growth, creates and destroys jobs, changes skill requirements in the economy, and shapes the capacity of firms and industries to perform in international markets. Science, technology, innovation and entreprenuerhip are the key mechanisms for encouraging sustainable growth. Therefore, improving innovation performence is a key challenge both for goverments and industries to maintain economic growth and full employment in all countries. (OECD)
The Pilot Study in Finland • Innovation process – – Mapping the future business environment Innovation strategy Implementation of the strategy Expanding the markets and ecosystems http: //urn. fi/URN: ISBN: 978 -952 -60 -5927 -3
Innovation process 1. Mapping the future business environment – Extensive mapping covering key areas, but not integrated into the innovation process 2. Innovation strategy/business strategy – Business strategy dominates leading to incremantal improvements – Very few ’bridgehead’ innovations
Innovation process (continued): 3. Implementation of the strategy – Stage gate model dominates – Very few customer driven, crowd sourcing, open innovation and internal incubator based solutions 4. Expanding the markets and ecosystems – Limited understanding of the ecosystem and value chain – Big data seen as an opportunity, but not used extensively – Market and competition perspective conservative not reflecting the business environment vision
Challenges to innovation activity on the level of products/technology • Ownership of innovations seems to disperse among business units • In the stage-gate model, there is internal bureaucracy and personal reflections • The stage-gate model seems to serve short-sighted innovation • Innovations requiring risk and courage, about which it is difficult to evaluate the anticipated revenue accurately, are often discarded when defining final development programs
Challenges to Innovation activity at the company level • A need for more creativity, experimenting and entrepreneurship in order to create breakthrough innovations • The focus of management is on emphasizing incremental development of existing activities • New initiatives and actively changing the business environment were not emphasized in the interviews, even if changes in the business environment were actively monitored in the strategy process • It is often possible to promote new openings and radical innovations only outside the current organizational structure and the existing strategy • The development logic followed by companies causes an innovation gap at the level of society
Innovation policy conclusions: • Innovation policy should help the natural integration of the new innovation instruments into the innovation processes in companies • Improving conditions for public/private partnerships • Increasing the understanding of the role of innovation in economic and social development as well as in job creation • In Finland the most important issue in reforming innovation policy is to strengthen the part of the innovation system that genuinely supports the development of new and internationally competitive business – Understanding of business concepts, emerging value domains and the ways of capturing the value – Improving systems integration in the innovation system – Funding of growth companies – Developing company spin-offs and business incubators
Any Questions Thank you
- Slides: 16